- Fall in markets after the panorama of interest rates of the Fed.
- The dollar extends the advance, as do Treasury bond yields.
- Gold aims to test year’s lows.
Equity markets are falling affected by what left the Federal Reserve meeting on Wednesday. The dollar continues to advance as Treasury yields soar. Strong drop in metals.
Powell changes everything
Stocks were rising, the dollar was falling and bonds were recovering after the decision of the Federal Reserve raising the interest rate, as expected, by 75 basis points and signaling that a smaller rate hike could come as early as December, but everything changed at Jerome Powell’s press conference .
The Fed chairman said that the final Fed Funds rate is likely to end up being higher than previously anticipated. This turned the dollar around, brought down Treasuries and pulled down Wall Street. This movement, after a pause during the Asian operation on Thursday, is still in force.
In Europe, the FTSE 100 falls 0.70%, while the DAX loses 1.05%. The S&P closed down 2.50% on Wednesday and futures are already down 0.60%. The bad tone persists and for now shows no signs of changing.
The treasury bond yields extend the rise. The two-year tranche yields 4.72%, after hitting new highs in decades. The reference to 10 years is located at 4.20%. This is pushing USD/JPY higher, which jumped above 148.00, and metals lower. Gold is one step away from this year’s lows below $1620 and silver is down $19.00.
The dollar is up on all fronts and is at weekly highs against most of its rivals. EUR/USD dipped below 0.9750, AUD/USD lost 0.6300 and NZD/USD trades at 0.5750, 200 pips off Wednesday’s high.
Among the worst performing currencies is the pound sterlingprior to the decision of the Bank of England. EUR/GBP broke above 0.8650, while GBP/USD is at its lowest in almost two weeks at the 1.1225 zone. UK 10-year bond yields remain stable (3.48%) while German yields (2.24%) rise significantly. A 75 basis point hike from the BoE is expected.
The market continues to analyze what the Fed meeting left behind. US data will be published on Thursday that includes jobless claims and service sector indicators. On Friday it will be the turn of the official October employment report.
Technical levels
Source: Fx Street
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